Case Note & Summary
The applicants, as landlords of Flat Nos. 4 and 5 in Jaitirath Mansion, Barrack Road, Mumbai, filed an application under Section 446 of the Companies Act, 1956 seeking a direction to the Official Liquidator to hand over vacant and peaceful possession of the premises, which were taken on monthly tenancy by the company in liquidation, Surendra Engineering Corporation Ltd. The company was ordered to be wound up on 16th February 2018, and the Official Liquidator took physical possession of the premises on 19th May 2023. The landlords contended that the tenancy rights were not assets of the company and that the premises were lying unused, relying on judgments including Modella Woollens Ltd. v. Official Liquidator and Patel Engineering Co. Ltd. v. Official Liquidator. The Official Liquidator argued that the premises were required for storing files and records of the company, and that the landlords should seek eviction under rent laws, citing Nirmala R. Bafna v. Khandesh Spinning and Weaving Mills Co. Ltd. The Court held that under Section 446, it has wide powers to entertain such applications and that tenancy rights in a monthly tenancy are not assets of the company. The Court found that the Official Liquidator's claim of need was vague and not genuine, as the premises were residential and the Official Liquidator had not provided specifics. The Court directed the Official Liquidator to hand over possession of Flat Nos. 4 and 5 to the landlords, while granting liberty to the landlords to raise claims before the Official Liquidator for other flats and for compensation.
Headnote
A) Company Law - Winding Up - Section 446 Companies Act, 1956 - Powers of Company Court - Landlord's Application for Possession - The Company Court has wide powers under Section 446 to entertain and dispose of claims by or against the company in liquidation, including directing the Official Liquidator to hand over possession of tenanted premises to the landlord where tenancy rights are not assets of the company. (Paras 13-14)
B) Company Law - Winding Up - Tenancy Rights - Not Assets of Company - Monthly tenancy rights do not constitute assets of the company in liquidation; the Official Liquidator cannot retain possession of premises merely on the ground that they are required for winding up, unless the need is genuine and specific. (Paras 4, 7, 14)
C) Company Law - Winding Up - Official Liquidator's Need for Premises - Scrutiny by Court - The Court can examine the genuineness of the Official Liquidator's claim that premises are required for winding up; mere ipse dixit is not sufficient. (Paras 7, 14)
D) Company Law - Winding Up - Lease vs. Monthly Tenancy - Distinction - The distinction between a lease and a monthly tenancy is relevant; in a monthly tenancy, the tenancy rights are not assets and the landlord can seek possession under Section 446. (Paras 8, 14)
Issue of Consideration
Whether the Company Court under Section 446 of the Companies Act, 1956 can direct the Official Liquidator to hand over vacant possession of tenanted premises to the landlord when the company in liquidation is a monthly tenant and the premises are not required for winding up.
Final Decision
The Court allowed the application and directed the Official Liquidator to hand over vacant and peaceful possession of Flat Nos. 4 and 5 to the applicants within a reasonable time. Liberty granted to applicants to raise claims before Official Liquidator for other flats and for compensation.
Law Points
- Tenancy rights are not assets of company in liquidation
- Company Court has wide powers under Section 446 of Companies Act
- 1956 to direct handover of possession
- Official Liquidator's need for premises must be genuine and not merely ipse dixit
- Distinction between lease and monthly tenancy relevant
Case Details
2025 LawText (BOM) (3) 120
Company Application No. 332 of 2019 in Company Petition No. 369 of 2015
Mr. Simil Purohit, Senior Counsel, a/w Ms. Pooja Patil, Mr. Mayank Bagla and Ms. Siddhi Bhutadia i/by Bagla & Associates for Applicants; Mr. Anirudh Hariani for Official Liquidator; Ms. Kshamaya Daniel i/by Crawford Bayley Co. for Noticee No.2
Jaikishan Narang, HUF through its Karta Mr. Kiran Deepak Nagpal & Ors.
Surendra Engineering Corporation Ltd. (in liquidation) & Ors.
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Nature of Litigation
Application by landlords under Section 446 of Companies Act, 1956 seeking direction to Official Liquidator to hand over vacant possession of tenanted premises.
Remedy Sought
Direction to Official Liquidator to hand over vacant and peaceful possession of Flat Nos. 4 and 5 in Jaitirath Mansion, Barrack Road, Mumbai.
Filing Reason
The company in liquidation was a monthly tenant; the premises were lying unused and tenancy rights are not assets of the company.
Previous Decisions
Company Petition No. 369 of 2015 was admitted on 5th May 2016; winding up ordered on 16th February 2018; Official Liquidator took physical possession on 19th May 2023 after court direction.
Issues
Whether the Company Court under Section 446 of the Companies Act, 1956 can direct the Official Liquidator to hand over possession of tenanted premises to the landlord.
Whether tenancy rights in a monthly tenancy constitute assets of the company in liquidation.
Whether the Official Liquidator's claim that the premises are required for winding up is genuine and sufficient to deny the landlord's application.
Submissions/Arguments
Applicants: Tenancy rights are not assets; Court has wide powers under Section 446; Official Liquidator's need is vague and not genuine; reliance on Modella Woollens, Patel Engineering, Metal Tubes, Shree Chamundi Mopeds, Satinder Pal Singh, Bharat Steel Tubes, Kaushalya Aggarwal.
Official Liquidator: Premises required for storing files; Court should not go into alternative arrangements; landlords should seek eviction under rent laws; reliance on Nirmala R. Bafna, Vaz Forwarding, Provident Investment, RBI v. Devare.
Ex-directors: Revival applications pending; application not maintainable.
Ratio Decidendi
Under Section 446 of the Companies Act, 1956, the Company Court has wide powers to entertain and dispose of claims by or against the company in liquidation, including directing the Official Liquidator to hand over possession of tenanted premises to the landlord. Monthly tenancy rights are not assets of the company in liquidation, and the Official Liquidator's claim of need for the premises must be genuine and specific; mere ipse dixit is insufficient.
Judgment Excerpts
The applicants being landlords of subject premises are seeking direction from this Court to the official liquidator to handover vacant and peaceful possession of the said premises, which were taken on monthly tenancy basis by the company in liquidation.
The said provision indeed provides wide powers to the Company Court to pass appropriate orders.
Tenancy rights cannot be said to be assets of the company in liquidation, the official liquidator cannot retain possession of the premises.
Procedural History
Company Petition No. 369 of 2015 filed in 2015 by Alliance Logistics against Surendra Engineering Corporation Ltd. Admitted on 5th May 2016. Winding up ordered on 16th February 2018, Official Liquidator appointed. Present application filed on 20th March 2019. Interlocutory application for repairs filed; inspection ordered on 21st September 2022. Physical possession directed on 28th April 2023, taken on 19th May 2023. Reply affidavit filed by Official Liquidator. Application heard and reserved on 3rd March 2025, pronounced on 12th March 2025.
Acts & Sections
- Companies Act, 1956: Section 446
- Code of Civil Procedure, 1908: Section 60(k)(c)
